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Top Lender to Rangers Has a Warning for Baseball

The top lender to the Texas Rangers has told Major League Baseball owners in a letter that the lengthy stalemate over the team’s sale could lead to the team’s bankruptcy or “costly, distracting and messy” litigation.

“It would be a bad result for the Texas Rangers, M.L.B. and the banks,” Andrew Herenstein, the managing principal of Monarch Alternative Capital, wrote in a letter to M.L.B. owners who met Wednesday and Thursday in Manhattan.

He said that the lenders would not agree to a sale to a group led by Chuck Greenberg, an owner of two minor league teams, and Nolan Ryan, the Hall of Fame pitcher and the Rangers’ president, “at a price below fair market value.”

The offer is believed to be worth about $575 million.

The Rangers and the Dallas Stars of the N.H.L. are owned by Thomas O. Hicks, whose Hicks Sports Group defaulted on $525 million in loans in March 2009. Additional costs, including unpaid interest, have pushed what he owes to about $600 million.

M.L.B. officials have taken over the sale process and have backed the Greenberg bid. In his letter, Herenstein said that the Greenberg-Ryan group had rejected “various modifications” in the sale agreement that would increase the proceeds to the lenders. Herenstein also said that the group had turned down different financing structures and a brief auction period to invite higher bids.

In the letter e-mailed to owners, Herenstein said that despite receiving no interest payments on loans to the Rangers and the Stars since early 2009, the lenders “have not taken and do not intend to take any actions that harm the value of the Texas Rangers.” He added, “We hope that Major League Baseball exercises similar restraint.”

He was referring to a letter sent to lenders late last month by Commissioner Bud Selig warning them that if they did not approve the sale, he could proceed with it by invalidating their loans “in the best interests of baseball.” His offer was roundly rejected.

In a news conference after the owners’ meeting, Selig insisted that his aggressive stance toward lenders would not hurt future team financings.

“We’ve talked to all of our major bankers,” he said. “They’re fine.”

But in his letter, Herenstein said that Selig’s threatened action would damage team values, “as funding will become more costly and difficult to obtain as lenders lose faith in the contractual security of their loans.”